The housing market is constantly fluctuating. Changes in supply and demand determine whether the market favors people who are ready to sell or people who are ready to buy. The market shifts between being a seller’s market and a buyer’s market and the state of the market can determine a home’s selling price. The coronavirus pandemic continues to impact businesses around the globe, and real estate is no different. Let’s look at one of these shifts in particular: the seller’s market. This article will explain what a seller’s market is, cover who benefits from it, and describe how to make the most of it if you are a seller.
What Is a Seller’s Market?A seller’s market occurs when there are more buyers than homes available. For example, if a neighborhood has three homes for sale and six buyers, then the sellers have the power. In a seller’s market, the homeowner can list a home at a higher price because they know that most buyers will be willing to pay the full price for it. In highly competitive markets, buyers might get into a bidding war, where each buyer keeps offering more for the property until only one person is left. This is an ideal situation for sellers, who want to turn a profit on their homes. In a seller’s market, most homes sell quickly. The significant number of buyers means the house is more visible. These potential buyers are also motivated to act quickly before the house leaves the market.
How Do You Know If It’s a Seller’s Market?There are several ways to conduct market research on your own or with the help of a real estate agent to know whether your area is in the midst of a buyer’s or seller’s market. You can start by checking the available inventory. How many homes are for sale in your area and how long have they been on the market? If there are a lot of homes and they have been on the market for several weeks, then you are not in a seller’s market. However, if most homes are pending after a week or two and there aren’t that many, then the market falls in the seller’s favor. It is worth looking at the market from a national, local, and even neighborhood level. National markets have a significant amount of sway on local sales. If people consider it a seller’s market nationally, it may work in your favor locally. However, different regions and even neighborhoods have different demand levels. Even if it is a buyer’s market in your city, your neighborhood may have more demand if it is in a popular area. Related: Buyer's Market or Seller's Market: How Can You Tell?
The Risks of a Seller’s Market (for Sellers)While a seller’s market might play to a homeowner’s favor, there are some mistakes that people make during the listing process. These can limit how easily you sell your house and how much you can get for it. A few common risks for sellers include:
- Listing your home too high to the point where no one can afford it or thinks it has value.
- Turning down quality offers instead of negotiating because you think demand is higher than it is.
- Waiting too long to list your house because you wanted to maximize how much it is worth.
What Should You Do If You Want to Sell During a Seller’s Market?If you are considering selling your home and are confident that it is a seller’s market, there are a few steps you can take.
- Meet with a real estate professional to determine your home’s expected value and the amount of wiggle room you have with negotiations.
- Take steps to increase the value of your home by making upgrades and cleaning out clutter.
- Determine whether your home needs staging to appeal to more buyers.
- Create a timeline with your Realtor® for when you want to list your home and when you plan to move out.